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Probably the most significant example of servitisation is the successful transformation of IBM in the 1990s from a product-centric to a service-centric organisation.

Although IBM first released its personal computer to the market in 1975, sales were disappointing as there was low demand for computers. It was not until 1980 that IBM tried again to crack the personal computer market [2]. By then many other companies were already making the machines, and IBM was not able to gain immediate control of the market.

First, higher revenue potential often exists in industries with an extensively installedproduct base, such as the aerospace, locomotive and automotive industries. Service revenues can be one or two orders of magnitude greater than new product sales.

Success factors, based on the analysis of success stories like the IBM transformation, do not lay solely with capabilities for investment.

Top managementsponsorship and employee involvement are the top two factors, while monetary and other incentives come last on the list [4]. The necessary cultural changes include a mental shift from selling a product to thinking about the customer’s needs, basing decisions on data and facts, moving from relationship-driven approaches to performance-driven ones, and increased accountability and transparency.

If servitisation is the customer-led pull towards value creation, Industry 4.0 is the technological push, with IoT being the enabler of this phenomenon [5].

If servitisation is all about thinking like the customer, aligning with the customer’s needs and offering a service that provides value and changing our business models and behaviour to suit, Industry 4.0 is about figuring out how the firm can harvest the benefits of this closeness with their customers to improve their own systems and processes.

This article, originally titled ‘Servitisation: an opportunity to grab with caution’, was written by Eszter Gulacsy and previously appeared on the BSRIA website in January 2020. It can be accessed HERE.